American Life Insurance v. McAden

Mr. Justice Clark delivered the opinion of the court, The evidence shows that in May, 1869, a policy of life insurance was issued by the defendant, the American Life Insurance Company, to the plaintiff, Mary F. McAden in the sum of #20,000, upon the life of her husband Rufus Y. Me403 Aden of Charlotte, North Carolina; that the plaintiff paid premiums on this policy, in quarterly payments of $101.44, each, from its date, until in August 1879, when the company refused to accept the premium then tendered, declaring that the policy, by its terms, bad become forfeit to the company, the premium mentioned, not having been paid or tendered within the time stipulated, but one or two days later. This action of assiimpsit was thereupon brought not upon the contract contained in the policy, but as upon a rescission of it, to recover the premiums paid, upon a count for money bad and received by the defendant to the use of the plaintiff. Tiie policy was produced at the trial, and the plaintiffs offered to read it in evidence, but upon the objection of the defendants’ counsel, that it was an instrument under seal and the action assumpsit, tbo court excluded it. This ruling of the court was, we think, erroneous, but the defendant cannot complain, as it was made at his instance. The action it is plain, is not founded on the policy, for if the policy be in force, there can, in the nature of the case, be no recovery upon the count for money' had and received. The suit is in direct disaffirmance of the contract, and cannot therefore bo said to be founded upon it. Assumpsit, for money had and received, is frequently brought to recover back a deposit, or money paid upon an agreement, which the defendant omits or refuses to perform ; and on a single count, in the common form, various sums, received at different times, may be recovered: 1 Chitty PL, 353, 356. When, for example, a person purchases land and pays part of the purchase money, and the seller does not, and will not, complete the engagement, so that the contract is totally unexecuted, he, the purchaser, may either affirm the agreement by bringing ail action for non-performance of it, or he may elect to disaffirm it, ab initio, and bring an action for money had and received to his use: 1 Sugden on Vendors, p. 236, ¶ 39. Or, where two persons enter into a contract for services, and after part performance, by one, the other denies its existence, and gives notice of his intention to disregard it, the party not in default may at his option perform fully, and enforce the contract, or consider it at an end, and recover for part performance, upon a quantum meruit: Moorhead v. Fry, 12 Harris, 37. In Feay v. Decamp, 15 S. & B., 227, there was an agreement under seal for the sale of land, with possession delivered, and a large part of the money paid, but not to the extent the contract required; the owner resumed the possession and declared the contract at an end; held, to be a disaffirmance, and that the vendee might, in an action of assumpsit, recover back the [404] money paid, on a count for money had and received. The doctrine as to the distinction to be drawn between a suit on the contract, and a suit grounded upon a rescission of it, is thus plainly stated in Smethurst v. Woolston, 5 "W. & S., 109: “ But this distinction, which pervades all the authorities, governs the whole case; for the purchaser may declare specially for the breach of the contract, or simply for money had and received to recover back the deposit, if any be made, or the purchase money if it be paid ; or he may join both causes of action in the same declaration. And when this is done, it is granted that, under the money count, the money advanced may be recovered back ; or where a specific article has been given in satisfaction, the purchaser may, when default is made, elect to consider the contract at an end, and recover the article itself, or its value, from the vendor. But, on the other hand, where the purchaser declares specially for breach of the contract, and thereby affirms it, the only rule of damages is the value of the article at or about the time it is to be delivered.” The same principle is applied in Wilkinson v. Ferree, 12 Harris, 190, and Miller v. Phillips, 31 Penn. St., 218. In all such eases, the contract, although under seal, is rightly received in evidence, to exhibit the transaction as it previously existed, to determine the resulting rights of the parties, and, in some cases, perhaps, to aid in the assessment of the damages : Mehaffy v. Share, 2 P. &. W., 361; Carrier v. Dilworth, 59 Penn. St., 406. If, however, the contract has been in part performed, the plaintiff having received some substantial benefit therefrom, and, if, upon a verdict in his favor the parties cannot be placed in statu quo, the count for money had and received, in general, is not maintainable: Chitty PL, 355. The plaintiff must show that he has equity and good conscience on his side, or he cannot recover. In the case at bar, the rights of the parties, under the contract of insurance, had attached, but the plaintiffs had never received any actual benefit from it. They may in some sense perhaps, be said to have enjoyed the protection which the policy afforded in the event of the husband’s death, but as that event did not occur, the policy had as jmt been of no appreciable actual advantage to the plaintiff, and no real disadvantage to the defendant. The parties for anything that appears, upon the plaintiff’s recovery, are placed precisely in the same situation they were in, before the contract was made; for, al ■ though the company carried the risk and the plaintiff, Mary F. McAden at all times, during the continuance of the contract, upon the happening of the event provided against, was entitled to the indemnity it secured, yet the company has paid [405] nothing and the plaintiffs have received nothing. As in the case of any other contract the parties were each entitled, during its continuance, according to its terms. The policy, when made, was admittedly valid; the premiums which were paid were voluntarily paid upon that policy , the risk had been running for ten years ; the obligations of the contract were long since in force, on both sides, and it is clear that the plaintiffs could not on their own mere motion rescind it, so as to recover hack the premiums paid ; but if after receiving these several premiums, the company without right refuse to receive further premiums as they mature, deny their obligation, and declare the contract at an end, the plaintiff, we think, may take the defendants at their word, treat the contract as rescinded, and recover back the premiums paid, as so much money had and received for their use. Rescission or avoidance, properly so called annihilates the contract, and puts the parties in the same position as if it had never existed; and notice that a party will not perform his contract has the same effect as a breach: Bailout. Billings, 136 Mass., 309. It is of no consequence that the payment of the premiums was voluntary, upon a valid obligation of the plaintiff to discharge a debt which the plaintiff owed, and which the defendant had a right to receive; the action is not founded in any fraud or failure in the original contract, but on a rescission of it through the subsequent refusal of the defendant to perform it. It is clearly shown, indeed it is admitted, that the premium due in August 1879, was tendered to the company, and was refused, upon the ground that the company was not then bound to receive it, and that the policy, according to some alleged express stipulation it contained, respecting the payment of the premiums, was forfeited and void. The president of the company denied all liability on the policy, and declared the contract at an end. If the reasons assigned by the president were valid and true, the refusal to receive the premium was right; if the contract was in fact forfeited and void, there was no contract remaining to rescind, and if there was no rescission there could he no recovery of money had and received. But there was no proof whatever of a forfeiture of the policy; it was alleged, that the contract contained a clause, according to which, by reason of the non-payment of the premium due in August 1879, on or before the exact day designated for payment thereof, a forfeiture ensued; whether this was so or not, depended, in the first instance at least, upon the proper reading and construction of the policy itself, which the defendant would not allow the plaintiffs to offer in evidence, nor would they offer it themselves. The policy is therefore not before us ; we do not know what [406] it provides; if it contains any such clause, it should have been given in evidence. As the case is now presented to us, the company would appear to have declared the lapse of the policy, without any warrant whatever, and without cause; and if the defendants received the plaintiff’s money, and, under such circumstances, upon demand, refused to return it, we think it may be recovered back in an action of assumpsit: May on Insurance, 429; Seipel v. International Ins. Co., 84 Penn. St., 47. The case of McKee v. Phoenix Insurance Co., 28 Mo., 383, is, in all respects, similar in principle to the case under consideration ; there, a wife insured the life of her husband, and after making several payments obtained a divorce; other payments were afterwards made, when the insurer refused to receive a semi-annual instalment, tendered when due; in an action for money had and received, it was held, that the decree of divorce did not authorize a forfeiture of the policy, and that “ if the defendant wrongfully determined the contract, by refusing to receive a premium when it was due, then the plaintiff had a right to treat the policy as at an end and to recover all the money she had paid under it.” In some cases perhaps the defendant ought to refund the principal merely, and in others he ought ex cequo et bono to refund the principal with interest; each case depends upon the justice and equity arising out of its peculiar circumstances. In this case, however, interest was allowed from the date of the demand only, and certainly the defendant can not complain of that. The judgment is affirmed. Trunkey J., dissented.